The majority of inventory in today's stores are carried in gondola constructions. Gondola merchandising has changed little over the years. Generally there is a floor platform with a vertical upright pegboard. On the borders of the gondolas there are vertical weight-supporting uprights having a plurality of vertically aligned slots. The uprights, via the vertical slots, carry shelving and other inserts in or on which merchandise is placed. The pegboard carries some weight but it is minor in comparison to that carried by the uprights.
There is a constant demand for the self-service food and non-food packaged goods industry retailers to increase their efficiency. Add to this the ever-expanding lines of products designed to attract more consumers, and which constantly fight for greater shelf space. This has all resulted in a greater segmentation of sales per individual retail unit of product, or SKU.
Since some products sell better than others, there is a tendency to under-inventory fast moving products, resulting in costly, shorter reorder cycles to maintain proper inventory. There is not enough gondola space available to keep top inventory items in open stock, and the space has to be frequently serviced. At the same time slower moving items tend to stay on the shelves longer, occupying more space relative to their revenue contribution. All this activity has resulted in an extremely inefficient environment, both from labor, warehousing, and inventory management perspectives.
The current gondola merchandising system is outdated in its ability to inventory or display products in volume that match their turns. Accordingly, key sellers in the category tend to be depleted while slow sellers tend to be over inventoried. The current "solution" necessitates frequent ordering and stocking--a very costly solution. Typically a 40% increase in financing is required to carry double the amount of inventory of fast moving products upon which reorder cycles are determined.
As a result there is a need to plan or planogram gondola shelves more efficiently. This should result in creating a method of controlling inventory regardless of the product movement. While it is possible to compensate for key sellers by providing more selling volume (multiple facings), in reality, most stores are not large enough to accept a vast number of multiple facings of fast movers to, in effect, balance out the whole product category. This is a particular problem for supermarkets and self-service merchandising outlets that sell primarily small products and multiple stock keeping units or (SKU). An SKU can be any and all different products based on size, configuration, contents, etc.
Thus, you can have one product being presented in ten or twelve different forms. For example, aspirin can be divided into four different pain different chemistries, and then into powder, pill, capsule, gel, etc. Then there could be nighttime formula, morning formula, middle of the day formula, or baby formula. Aspirin can also go into products for menstrual cramps, headaches, or arthritis. All could be in different sizes. Thus, the permutations can be enormous. There might be over a hundred different SKUs for a single product in its various forms.
With present state of the art gondolas, there is just not enough space in the average store to display or stock adequately balanced inventories. What one ends up with now is an overstock of slow moving items and an understock of fast moving items, all because the gondola shelves are consistently uniform in size and depth.